EPA Ready to Finalize CO2 Limits on New Power Plants

Stephen Lacey is the Editor-in-Chief of Greentech Media. He manages a team of writers focused on solar, storage, efficiency, mobility, and grid modernization. He is producer/host of The Energy Gang and Interchange podcasts, two leading interview and analysis shows on the business of energy and cleantech.

After much speculation about when -- and if -- the Obama administration would start finalizing carbon dioxide regulations for new power plants, the wait is finally over.

This morning, the nation's top environmental regulator, Environmental Protection Agency (EPA) Chief Gina McCarthy, unveiled a proposal to limit carbon dioxide emissions from new coal and natural gas power plants. The rule has been in the works for years and has faced multiple delays, but the administration says it is now ready to start implementing it by the fall of 2014 after considering recent public comments.

"We did what democracy demands: we paid attention," said McCarthy, speaking at the National Press Club this morning. "We read those comments. We are confident that the carbon standards we are releasing today are both flexible and achievable."

EPA will create two separate standards for coal and natural gas power plants. Natural gas plants would be required to emit no more than 1,000 to 1,100 pounds of CO2 per megawatt-hour, depending on the size of the facility. The rules would also set a limit of 1,000 to 1,100 pounds of CO2 per megawatt-hour for new coal plants.

The average coal-fired generator emits 2,249 pounds of CO2 per megawatt-hour today. The EPA says the new standards for coal plants could be met by using carbon capture and sequestration (CCS) technologies.

McCarthy said the requirement to use CCS came after consultation with the industry and hearing from the public.

"New power plants can minimize their emissions by taking advantage of new technologies," said McCarthy. "There is considerable new data. We understood more about what technologies are available and understood how effective those technologies can be."

The regulations will face another round of public comment before implementation late next year.

The rules are one piece of the Obama administration's new climate strategy announced in June, which will rely solely on executive actions that don't need approval from Congress. However, with very few new coal plants actually in the works -- even with integration of CCS -- the rules will likely have a modest impact compared to regulations for existing power plants.

Below is a projection for the pipeline of new coal plants from the Energy Information Administration. Although coal is not completely dead, there will be very few plants constructed in the coming years due to slowing demand for electricity, the surge in renewables and natural gas, and new rules for mercury and air toxins established last year.

The big unknown is how the Obama administration will proceed on CO2 regulations for existing power plants -- a set of rules that could dramatically change the landscape for coal. Already, at least 33,000 megawatts of coal plants are expected to retire, and new regulations could speed up additional closures.

In his June speech on climate, President Obama said he would direct the EPA to speed up the rule for existing power plants so that it could be completed before he leaves office. However, the process will likely be slow and face numerous legal challenges.

McCarthy said this morning that the administration is currently working with states and other industry stakeholders to issue a draft rule in the summer of 2014, saying it was on a much "longer timeframe."

"We are committed to act on reducing carbon emissions from existing power plants. We have started the process already in order to meet that timeline."

Republicans and coal-state Democrats in Congress have vowed to prevent the EPA from implementing the rules.